20th century rewards fail 21st century economy

“There is a mismatch between what science knows and what business does.” – Dan Pink, TED Talk, The Puzzle of Motivation. Capitalism is based on the idea that if you want people to perform better, you reward them. The higher the rewards the better they are likely to do, and that type of thinking works well for any job that is mechanical in nature. However, according to Pink, any job that requires even rudimentary cognitive processing will be stifled by this type of reward system. In the 20th century with its Henry Ford mentality and work processes, it was fine to reward people based on their performance because jobs were based on mechanical work processes. In the 21st century, that is no longer the case. Jobs have moved toward information and intellectual property. It is important for people to be creative, and the old reward schemes no longer work because they actually inhibit people when it comes to being creative. The biggest reason for this inhibition is that the “if then” rewards narrow the focus of people trying to figure out a solution to the problem. Creativity calls for a broadening of perspective. These types of rewards also divide attention between the job at hand and the finding of a solution. IN any case where the rules are nebulous and the solution is not obvious, “if then” rewards actually cause people to take more time to find the right solution, generally because there is no one right solution. Pink says that in the new economy, basic needs still need to be met. Beyond that, employees, who have autonomy, who are working toward mastery and who are involved with jobs that have a purpose – something larger than the employee – will be able to lead their companies into the next wave of economic prosperity. Self-direction will lead to an employee’s greater investment in a company.